The Central Bank estimated the premium for the placement of new public debt after the sanctions

After the entry into force of the latest US sanctionsagainst OFZ, the Russian state debt is placed with a premium compared to previous issues, the Central Bank reported. Investors are in no hurry to invest in securities amid rising key rates

The premium to the yield of post-sanction issues of federal loan bonds (OFZ) in comparison with government securities placed before the imposition of sanctions is from 10 basis points (bp), according to the Bank of Russia review “What Trends Say”. However, this is due to the low volume of placements by the Ministry of Finance and in the future, yields should even out, the Central Bank believes.

How the public debt has risen in price

On June 14, the US authorities put into effect sanctions prohibiting investors from buying new Russian government debt (the restrictions do not apply to transactions in the secondary market). After that, the Ministry of Finance began issuing new securities in order to exclude the possibility of "infection" of old issues.

US sanctions against Russian debt come into force Economics

“So far, issues placed after June 14 are traded with some premium relative to the “old” issues of close duration (about 10 bp for 10-year paper and 13 bp for 20-year paper),” notes the Central Bank review. The regulator explains this premium by "a small volume of securities in circulation." “As the turnover on new securities grows, the yield levels of old and new issues will converge,” the Central Bank is confident.

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